Employment and unemployment down marginally. Wage growth and inactivity up a bit. Cut through the mass of data and the conclusion is clear: the improvement in the UK labour market has stalled.
The latest news from the Office for National Statistics is consistent with the recent reports from the Bank of England’s regional agents, the officials who act as the eyes and ears of Threadneedle Street’s monetary policy committee.
These regular updates suggest that companies have become a lot more cautious about hiring since the UK voted to leave the EU in June. The fall in employment of 6,000 during the three months to October followed an increase of 173,000 in the quarter ending in July. That is a marked deceleration and has been particularly pronounced in the private sector.
For the moment, the figures chime with business surveys and suggest that employers are adopting a wait-and-see approach, rather than resorting to major layoff programmes. The more timely but less comprehensive claimant count measure of unemployment showed a small rise of 2,400 in November, but this was lower than the market consensus of 6,500. There were as many job vacancies in the three months to November as in the three months leading up to the Brexit vote.
The most encouraging piece of news was the pickup in regular annual pay growth from 2.4% to 2.6%, because this will help blunt the impact of rising inflation caused by the higher oil price and the declining value of the pound.
It is probable, however, that prices will rise more quickly than wages in the months to come. This was a distinctly soft labour market report. The days of rapid jobs growth are over for now and that means it will become harder for workers to get more for their labour.
